As China increases its wages and turns to its domestic market for the sale of its goods, the cost of Chinese-made goods will increase abroad. Nevertheless China will remain competitive on the world market, partly because workers in places like Haiti, Indonesia, Lesotho, and Bangladesh cannot be squeezed any harder because they are already not paid a living wage. DC
Labour costs are rising in China, with official figures showing minimum wages have grown by more than a fifth.
The average minimum wage in most of the country rose by 21.7% at the end of September, the Ministry of Human Resources and Social Security said.
This comes despite a broader economic slowdown engineered by Beijing to bring down inflation.
Rising costs may mean China will lose its edge as one of the world’s cheapest manufacturing centres.
According to a study by consultants KPMG, Indonesia and Bangladesh are benefiting most as rising costs in China force firms to switch production.
The figures cover 21 of China’s 31 provinces and regions, the ministry said.
The city of Shenzhen, next to Hong Kong, guarantees the highest minimum wage of 1,320 yuan ($207; £130) a month.
Beijing offers the best hourly rate of 13 yuan ($2).
The rise in minimum wages is in line with China’s efforts to boost spending power and domestic consumption.
KPMG says that minimum wage levels in China are four times greater than other places in South and South East Asia.
However, it believes China can defend its position because of its productivity and infrastructure.
China is still dominant in the production of goods such as consumer electronics and furniture.
Source: BBC News
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